April 24, 2025 • 38 mins
Mike Armstrong and Paul Lane discuss Google setting the stage for megacap earnings as headwinds swirl. US labor market holds steady despite darkening coulds from tariffs. Google is forcing remote workers to return to the office with a hybrid schedule. Huge stock swings are the new normal for frazzled investors. Trump rejects the millionaires tax hike. Fertility rates continue to plunge in the US.
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Speaker 1 (00:00):
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(01:06):
and faw Lane.
Speaker 2 (01:11):
Good morning, Welcome back to the Financial Exchange. Our top
story the day continues to be the ongoing trade war
between the United States and China and the fallout on
corporate earnings and elsewhere from that possibility. But today equity
markets moving strongly to the upside. We've got the Dow
Jones Industrial average up two hundred sixty nine points or
(01:33):
two thirds of one percent, the S and P five
hundred up seventy two or one to third percent, in
the NASDA c up three hundred five points one point
eight percent this morning, yield on the ten year treasury
down slightly to four point three two seven, so some
calm there in the bond market for the time being.
And oil, which has obviously been dropping substantially, now sitting
(01:54):
at sixty two dollars and seventy cents a barrel. That
brings our national average for gas prices across the country
out down to three dollars and seventeen cents as of today.
Across the New England region, you're largely seeing that a
little bit lower, with Maine sitting at two ninety eight,
New Hampshire sitting at two eighty five, Massachusetts sitting at
(02:17):
two ninety six, Rhode Island at two ninety five, Connecticut
at three oh six, and Vermont at three oh nine. Uh.
The only other thing I want to check on is
where we are now sitting at for the thirty year
fixed rate mortgage. Yeah, sitting still just below that seven
percent mark on the general thirty year fixed and slightly
above that seven mark on the thirty year jumbo. Anything
(02:40):
else catching your eye in terms of market. Obviously we're
in the midst of that spring home buying season that
will really continue right through July fourth holiday and then
you know, see another uptick in the fall in all likelihood,
so you know that that thirty year mortgage story continues
to dominate, and we're starting to see inventory tick up
(03:01):
in large swaths of the country, just not here in
New England, but with mortgages up at seven percent, one
of two things is going to happen. Either people are
going to delist homes because they're not moving, or prices
are coming down.
Speaker 3 (03:15):
Yeah. We saw a report come out this morning where
the sales of previously owned homes in March fell five
point nine percent from February to an annualized rate of
four million on a seasonally adjusted basis, they were lower
two and a half percent lower than March of last year.
So kind of furthering your point, Mike. Increase in inventory,
it was up twenty percent from a year earlier, but
(03:37):
the amount of sales seemed to be slowing down, a
combination of the higher mortgage rates than the concern of
the broader economy.
Speaker 2 (03:45):
Back to the subject of Chinese tariffs, the Ministry of
Commerce spokesperson for China, he Ha Dong said, at present,
there are absolutely no negotiations on the economy and trade
between China and the United States. So again this is
going to be the dominant story here and thus far,
(04:07):
in spite of the commentary this week, every time the
President has announced tariffs on China, there has been no
hint of negotiation or hint of reconciliation. It has been
China responding in kind and with ford maybe not necessarily
in kind because they have different tools in their belts,
but responding very differently than, for instance, what you got
(04:30):
out of the European Union, Vietnam or other countries that
have largely come to negotiating table. We will kick off
Megacap earnings this afternoon after the bell with Alphabet reporting,
What are we expecting to hear from Apple s I
keep saying Apple, Apple, not Apple Alphabet.
Speaker 3 (04:51):
It is Google.
Speaker 2 (04:52):
Let's just call it Google. I'm done with this, Google's
parent company. What do we expected to hear and will
it really tell us any thing larger about the state
of the economy. I mean, very few companies get a
better idea of advertising revenue, I suppose, so that that'll
be compelling.
Speaker 3 (05:08):
Yeah, one could argue that they have a monopoly on
online advertising. In fact, many federal judges are making that argment.
Speaker 2 (05:17):
This week.
Speaker 3 (05:17):
They are battling the Justice Department over the potential breakup
of Alphabet, you know, decoupling. Perhaps it's Google Cam browser
or some of its advertising technology. Those are some of
the things that have been potentially rumored to have occurred
or something that the Justice Department would like, but that
still has to go through the court process. They also
(05:38):
have had two federal judges ruling that they have illegally
monopolized some online advertising technology markets. So that's kind of
the backdrop on what they're dealing with on the legal front.
Of course, as you mentioned, they're on the forefront of
the advertising for online If you have any sort of
recessionary impacts to a decline in e commerce an averageing spending,
(06:00):
they could be significantly impacted there. The numbers that they're
going to report obviously are on the prior quarter, so
they're anticipating a twelve percent revenue growth for the quarter.
Some pretty strong numbers. But ultimately the I for all
investors out there will be any type of commentary they
may have on the current economic backdrop. They find themselves
(06:20):
in a difficult place. When you're in the hore of
the Justice Department. Microsoft can sort of relate to this
back in the late nineties, where it is a period
of significant innovation and AI. It's extremely competitive as to
who is going to grab the biggest foothold there. And
I talked about this on the show the other day. Chat,
GPT and other models like that to me serve as
(06:41):
a big risk to Google's search business.
Speaker 2 (06:44):
Explain that a little bit better, because you know, I've
been watching the two of us right I'm ongoing right
now googling different things, looking up different items. You've got chat,
GPT open, and you know are also summarizing some things.
But that's some pretty serious headline risk for Google. Outside
of all of the anti trust concerns that have been
(07:06):
dominating Google story over the last few years. This this
AI risk spell it out word for word in terms
of how it poses a threat to Google.
Speaker 3 (07:15):
Yeah. So Google has about ninety percent of the search market.
If you look at the other competitors that it is
in the same arena with, they just absolutely pale in comparison.
They are dominant in that space. And how Google makes
its money is that Mike or myself if we're out
traveling on vacation, we're looking up, Hey, good restaurants in
(07:37):
the Charleston area or where I was, or whatever the
case may be. They are generating Google that is revenue
from advertisers for local restaurants to be at the top
of their search. There. If that were to deviate where now,
as you mentioned, I'm on shat Gibt searching things, there's
other competitors out there. Meta is going to have its
(07:58):
own one and Google, to be fair, it does have
its Gemini service. But there is the potential for fragmentation
the search market where my go to for looking things
up may not be Google going forward, And in particular,
when you have the backdrop of a lot of antitrust
pressure on Google. What happened to Microsoft, This was a
(08:19):
different technology trend is more specific to the PC market,
But they took their eye off the ball or just
were all consumed by the anti trust allegations, and as
a result, they missed a lot of technology trends over
the next decade, particularly in mobile and others. The same
thing could potentially happen to Google. It's just a risk
that loom.
Speaker 2 (08:37):
Yeah. I mean, if you're sitting there in I don't know
when did the BlackBerry come.
Speaker 3 (08:41):
Out early two thousands six, Yeah.
Speaker 2 (08:45):
If you're sitting there in nineteen, it's earlier than that.
If you're sitting there in nineteen ninety nine and saying, hey,
who's going to be the dominant player in the you know,
consumer hardware market for electronics, you're one of the biggest
bets out there, would have had to be Microsoft. I
remember that came out with a smartphone very early on
(09:06):
that completely failed across the board. You probably wouldn't have
put a whole bunch of money on Apple, and you
certainly wouldn't put any money on some tiny Canadian company
called BlackBerry. But yeah, with Google, that threat to their
search business, is it could be overstated because they are investing,
you know, billions upon billions into their own artificial intelligence
(09:29):
and are looking for ways to monetize it as well,
and they can afford to do so, so they do
have a leg up there. But I think about it.
Just think about it. Actually, how when you went to school,
I distinctly remember having classes with librarians on how to
properly use search when doing a research paper. When when
(09:50):
you know, when utilizing search, because you know, they were
going from he here is how you used to look
it up in an encyclopedia to here's how you accurately
use search and Google and get rid of bad results
and find the stuff that you actually need and cite
it properly, et cetera. That same exact process, I guarantee
you is occurring already or is being planned out in
(10:14):
public schools across the country. When it comes to the
use of artificial intelligence, it can do really compelling things,
stuff that I have no idea how to do as
somebody who's only one generation removed from it. But you know,
I'm sure you guys have heard of this too. But
there's another AI system out there. You can basically feed
a whole bunch of different sources that you want to
(10:34):
learn about, like, okay, you know these five articles. Obviously
you can do things where you summarize them, but there's
another AI service where you say, okay, you know, read
these seven different pieces and create a thirty minute podcast
for me. So I want to listen to it on
my way home, and I want to just get it
that way instead of having to read through something, and
it will create a personalized podcast based on the sources
(10:55):
that you used. That is not something that Google is
going to be prepared to deal with. They could because
if they can sell advertisements on those podcasts, then they
can crush it. But that is a real threat to
the entirety of Google's business that didn't exist before. And
we're not even getting into the fact that two judges
(11:15):
have now called them a monopoly and are looking for
some form of breakup when it comes to their business.
So it'll be interesting to hear from a number of
different perspectives about alphabets earnings. I don't think it's going
to tell us much about the state of the consumer
and their concerns about recession and trade war, but I
do think it tells you a lot about where they
see threats coming down the highway. Let's take a quick break.
(11:37):
When we come back, a little bit trivia for you
next year on the Financial Exchange, Tara.
Speaker 1 (11:42):
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(12:02):
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This is the Financial Exchange Radio Network.
Speaker 4 (12:16):
All right time for trivia here on the Financial Exchange.
And today is Kelly Clarkson's forty third birthday. Clarkson rose
to fame when she became the first winner of American Idol.
Clarkson has since gone on to sell over thirty million
albums and has won three Grammy Awards. So trivia question today,
(12:38):
what year did Kelly Clarkson win American Idol? Once again?
What year did Kelly Clarkson win American Idol? Be the
seventh person today to text us at six one, seven, three, six,
two thirteen eighty five with the correct answer and you
get a brand new Financial Exchange Showed T shirt and
once again the seventh correct response text us at six one, seven, three, six,
(13:02):
two thirteen eighty five will win that T shirt. See
complete contest rules at Financial Exchange Show dot com.
Speaker 3 (13:08):
What percent of our listeners could rattle off of Kelly
Clarkson song?
Speaker 2 (13:11):
All of them? I'll see. Uh. We did receive an
economic data point this morning that we have not yet discussed,
which was the weekly jobless claims. As a reminder, we
get a monthly Job's Report that surveys both businesses as
well as consumers. We also get a weekly read from
states who submit data to the federal government on pardon me,
(13:34):
how many people are signing up for unemployment. And it
is as close as you can get to a real
time indicator on the state of the labor market. And
so we've been keeping an eye on it because look,
CEOs have not been talking very optimistically about this year
and they have been pulling back on new hiring. But
the weekly jobless claims came in at two hundred and
twenty two thousand. That's up about six thousand from the
(13:56):
month prior and right in line with expectations. So the
firing story continues to be a non story to this point.
I think there's a few things you can point to here. One,
if you're a government worker who has been laid off
to this point, you are likely receiving severance, so you
cannot file for unemployment anyway. And you also don't show
(14:17):
up in these numbers in the first place because you
have a different unemployment system that you file through. And
if you're a government contractor, same story. To this point,
you haven't really seen those job cuts come yet because
the funding hasn't been fully cut off, and the Trump
administration is winning and losing some court cases when it
comes to all of that, and so, yeah, there have
been stories here and there of doze cuts and how
(14:39):
that might play out, but it certainly has not affected
the labor market to this point. And likewise, you know,
if you had asked me late last year when we
were talking about the things that Amazon and Google and
Microsoft we're all talking about, I would have told you, yeah,
it looks like layoffs might be around the corner, but
to this point they haven't really occurred. But I want
(14:59):
to cover some of those actions that Google and the
big tech companies have been taking pardon me, Google, for one,
is forcing some remote workers to come back three days
a week or lose their jobs. It's a pretty far
cry from where they were a few years ago during
the COVID pandemic, and offering those employees remote work, you know,
substantially falls right in line with what their competitors have
(15:23):
been doing, though, because you know, Amazon did this, I
think it was late last year, kind of blew up
in their face because they were hoping a bunch of
people quit and turned out they didn't have enough office
space for those people. So we'll see if Google falls
for the same problem here. But I'm seeing Microsoft too.
Microsoft is apparently kind of taking a page out of
Amazon's playbook here, which is, hey, you low performing employee
(15:49):
based on these metrics, We're going to put you on
a performance improvement plan, and if you don't improve, you
are fired. But as an added incentive, like here's ten
thousand bucks if you just want to walk away, and
I don't think that's actually gonna be successful for them
in this economy to get rid of some of those
low improves. The reason they do this is because you know,
if you take that money, you're far less to end
(16:10):
up in a lawsuit with the with the employer, and
so it's you know, on average, probably just cheaper for
Microsoft to go and look at something like that, and
the package is probably a heck of a lot more
than ten grand. But in any case, it's another company,
you know, Microsoft, Amazon, Google, some of the biggest tech
employers out there that seem to be speaking from the
same playbook here. I don't. I'm sure there are some
(16:34):
at Google who are really seeing the benefit of being
in office. But what I buy and large see here
is a company that wants to reduce headcount and wants
to do so in the least controversial way they can,
which is saying, hey, get back to the office.
Speaker 3 (16:51):
The path of least resistance, sort of not a layoff,
but sort of trying to usher people out the door
as nicely as possible. And that that was the Amazon
story too. You know, they can make the veiled argument
of oh, it's to increase productivity and you know, communication
between teammates that you come back into the office. But
ultimately we know what the real story is here, and
(17:12):
it's pointed out by them offering voluntary biots. You know,
if you're doing that and you're coupling that with bringing
someone into the office three days a week. That is
the intention behind these moves.
Speaker 2 (17:22):
I struggle with the employment picture because on one hand,
it is very much good news that the unemployment right
still sits at the low fours and you know, we
are still not seeing any sort of uptick and jobless
claims or really any indication of mass layoffs is just
not there. And I find that quite encouraging, because you know,
we're at such a healthy stand starting point from the
(17:43):
labor market. And look, I know, if you are listening
with a college student who's graduating in May at home,
you're probably experiencing something very different, and I acknowledge that,
but you know, compared to other times in history, this
starting point is pretty good. The downside to that is
cuts to the job market never come early in an
(18:06):
economic downturn. They're one of the last things that you
see in terms of that overall downturn. And I'm wondering,
if I can quickly pull it up here unemployment rate,
I want to look it up back in eight just
so we can there we go. So the unemployment rate
during the downturn in two thousand and eight, it started,
(18:31):
you know, May of seven was sitting at four point
four percent. You didn't hit that peak until October of
two thousand and nine. The stock market had already bought
them back in March of nine. You had already been
in a recession for a good year prior to that.
The unemployment rate, which by the way, topped out at
ten percent during that recession, did not hit that peak,
and you did not see those big layoffs really until
(18:53):
you know, midway through eight and laid into nine when
those things really started taking place. And so the unemployment
rate is very important. It is an indicator of a
lot of different things. It is not a leading indicator
of recession. Is the important thing to notice here. If anything,
it tells you you're already in a recession once you
start seeing it going up.
Speaker 3 (19:13):
I'm interested to see. I believe it's probably next Friday
that we get the month of April jobs for in
terms of what the numbers come out, because I just
can't imagine, like you were mentioning on the hiring front,
I could see the job ascames we've talked about that
data not be an issue, but I can't see too
many new jobs being added. But we'll see.
Speaker 2 (19:30):
Quick break trivia winner and then Stock Investors and the
Frazzled Market coming up next.
Speaker 1 (19:42):
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(20:03):
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Speaker 2 (20:16):
All right.
Speaker 4 (20:17):
Trivia question today was what year did Kelly Clarkson win
American Idol? Well, that would be back in two thousand
and two. Scott from Chelmsford, mass was our winner today,
taking home a brand new Financial Exchange Show T shirt
and we played trivia every day here on the Financial Exchange.
(20:40):
See complete contest rules at Financial Exchange Show dot com.
Speaker 2 (20:43):
Paul I oftentimes pooh pooh folks when they tell me
about volatility in the markets, because I've hired people describe
twenty twenty four as a volatile market and it just
plain old wasn't. But you know, there's a lot of
different things that affect people perceptions of volatility. One of
them is the Dow Jones Industrial average because it's just
(21:05):
always been a part of market reporting, and these days,
you know, today we're having a two hundred and fifty
point swing. That represents about two thirds of a percent,
and it's not that significant. However, this year you can
absolutely claim volatility is back in fashion. And you know,
we whether you want to measure with the VIS which
you know reached thirty four back in April, which is
(21:29):
you know, highest you saw since COVID levels, whether you
want to you know, talk about any other measure in
the bond market, et cetera. It is certainly the case
that volatility is back in markets right now. It is
higher in many ways than we've seen for several years.
And I think investors, especially newer investors, are having a
(21:52):
tough time kind of digesting that because honestly, even in
twenty twenty two when we saw some volatility there, it
was not it was very short lived. COVID was very
short lived in terms of volatility we saw there, right,
you had market breakers back in circuit breakers on the
markets back in twenty twenty that hit, And so yeah,
(22:16):
I kind of shake this moment off because it wasn't
as bad as that. But if it continues, I just
I'm seeing it play out with people I speak to
about their lack of confidence that they had gained over
the last few years when it came to invest investing
when markets are down, et cetera, et cetera. I think
all that's being challenged this year.
Speaker 3 (22:35):
It is it's been a year that's been just marred
by up and down days. It just is something that
really that you couldn't remember since twenty twenty, that is
the last period of time the SMP had gained or
lost at least one percent in seven of the last
ten sessions. In April is going to be the most
volatile calendar month. So it comes to a point when
(22:56):
you're dealing with clients that you just want to make
sure that their allocation is positioned appropriately during this period
of volatility, because that's what you lean on in these times,
and people who do not have an allocation that they're
comfortable with usually these periods of volatility leads to them
questioning the strategy or getting emotionally upset by the ongoings
(23:16):
of the market that we've seen over the last month.
Speaker 2 (23:18):
And what worries me the most when I think about
this overall situation is there's a lot of people that
I've talked to over the course of the last year
or so who may be messed out on some of
the big gains in twenty three and twenty four because
they just didn't think they were possible. They maybe thought
we were going into recession, or the taxes were going up,
or any number of things might have played out. They
are feeling like they are playing catch up perhaps, And
(23:41):
in many cases, the story I've heard is, you know,
I really thought, whether I agree with his policies or not,
I really thought that Donald Trump would be good for
the stock market. And I might have gotten more aggressive
because of that with my investment portfolio than I otherwise
would have. And now I'm kind of sitting here. I'm
not ruined. Most people haven't been ruined by this type
(24:02):
of volatility unless you're all sorts of levered up into
concentrated concentrated bets. But maybe just getting a little bit
concerned about, Okay, if this were to continue, if this
does result in a recession, if the tariffs are back
on play, as they seem to be changing week to week,
how am I positioned for something like that? And that's
(24:24):
that's the good question to ask. It's it's not a
great question to ask, like, Hey, when should I When
should I sell all this and go to cash, trying
to time that maybe somebody out there can do it,
But I've never met them, and I certainly know that
I can't try and figure out the timing of all
of this because the news story is changing every day.
The question to be asking yourself is if we do
(24:45):
get that worst case for stock markets. I'm not saying
about the employment situation or manufacturing, but like, let's talk
about the worst case for the stock market, which is
a drawn out, protracted recession with a deep draw down
in stocks. Will I be a to withstand that? And
I don't just mean that from your portfolio, but hey,
if I lose my job, what sort of situation would
(25:07):
I be? And if I was without an income for
six months, would I be able to make an emergency
repair to my home or on my car if something happened?
And then yes, of course, if I did see a
stock market downturn that lasted four or five years, which
I know is a foreign concept to some people listening
right now, but oh wait, that downturn lasted about five
(25:28):
and a half years. Dot Com bobble that during downturn
in stocks lasted a good six years. If you were
diversified and a lot longer if you weren't. If you
can't answer those questions of hey could I withstand that?
And how would I do it? Please give the folks
at Armstrong Advisory Group a call. We offer free consultations.
We'll sit down with you to address your specific issues
(25:52):
with your specific portfolio and your specific lifestyle, because it
is different for every single individual and simply filling out
a survey online is not going to answer all those
questions for you. Give us a ring at eight hundred
three nine three for zero zero one. That's the number
for the Armstrong Advisory Group. We've got a presence across
New England, but we sit down with our clients across
(26:12):
the country, across the world, So if you have questions
or you know somebody who does, the number again is
eight hundred three nine three four zero zero one.
Speaker 1 (26:22):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
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Speaker 2 (26:37):
In the backdrop of everything going on with tariffs, there's
also been competing tax bills that have been making their
way through the House and Senate via the reconciliation process
because they do not have the votes to pass them
via a regular bill. The conjecture out there has been
throughout all of this, where are the cuts going to come?
(26:58):
And how are you going to pay for them? Because
there are limitations in terms of what they're able to do,
And frankly, the limitations that I'm most concerned about today
is how is the bond market going to treat some
sort of giant tax cut with big deficit spending if
that's what we get. I'm not convinced that that's where
we're going to end up. But if we get that,
(27:19):
will you see yields rise? Because international investors are just
a bit fed up with the US story, both in
terms of trade as well as deficits. The possible outcome
of what had been discussed is hey, in order to
fund some of these big tax cuts on social security,
on over time, on tips, would be bumping up the
(27:40):
tax rates for top income earners, for millionaires and other groups.
Steve Bannon had pushed for this quite a bit behind
closed doors. President Trump over the last few days seemed
to have tossed some cold water on that one, saying
that a potential millionaire's tax was quote very disruptive. That
(28:01):
was after House Speaker new former House Speaker New Gingrich
circulated message from Trump saying the President loves the idea
of a small tax increase on the Ridge, but was
counseling Republicans against it for a number of political reasons.
This is all reporting from the Wall Street Journal. So
this makes two things more likely to me. One, I
don't think that that top income bracket is moving much
(28:22):
at all, which is currently sitting at thirty seven percent.
So if you're earning I think it's as a married
couple over three quarters of million dollars, you're hitting that
thirty seven percent rate, probably not going anywhere during this bill.
It also makes it more difficult to pass some of
those priorities though that he campaigned on, such as the
tax on tips, social Security, and other items that would
be more main street focused. So I'll be very interesting
(28:46):
to see where this all comes out. They are not
finding much success in finding the cuts that they want
to do to offset all of this, and so in
the absence of tariff revenue offsetting it, in the absence
of massive government cuts to Medicare, Medicaid, so security and defense,
which are not coming either. I don't know how much
(29:07):
of a tax bill you're really going to be able
to put together here without that tax income on millionaires.
Speaker 3 (29:12):
Yeah, well, I'm surprised that this is something that the
Republican Party was potentially learning option. Yeah, it just seems
so counterintuitive.
Speaker 2 (29:21):
But frankly, look, I mean the political norms have changed,
of course, they have changed significantly. They've been changing over
the last eight years. But the Republican Party is not
the party of free trade anymore. They are not necessarily
the always pro business party as they were, you know,
prior to twenty sixteen, and that has been there's been
(29:44):
a general push away from free markets from both Democrats
and Republicans over the last few years. But this did
surprise me quite a bit. It's pretty unrecognizable from the
Republican mantra over the last fifty years, but was kind
of in line with stuff like tariffs and other policies
that have been coming out of the Republican Party this
time around.
Speaker 3 (30:05):
Not that I agree with the idea of increasing the
highest bracket, but Trump mentioning that the reason that he
shouldn't proceed they shouldn't proceed with it is it would
be very disruptive and a lot of millionaires would leave
the country. That I sort of scratched my head on
just because the whole idea of renouncing citizenship and you know,
moving out of the United States to me, just because
(30:26):
of an increase of thirty seven to thirty nine points
six percent, to me, feels rather unlikely.
Speaker 2 (30:32):
I would agree there. I would be much more concerned
about a bump up of the corporate tax rate and
company's abilities to relocate their headquarters. Go show me which
country that you actually would feel comfortable living in that's
going to tax you on your income if you're making
you know, three million dollars a year at less than
forty percent. Yeah, it's a pretty limited list, right, It's
(30:54):
a fairly limited list. And so I'm with you there.
I don't know to what degree it actually drives investment
out of the United States. Let's take a quick break
when we come back, bit of stack roulette. Here on
the financial exchange.
Speaker 1 (31:06):
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Speaker 2 (32:03):
Time for bid of stack eru let here, Paul, What
do you have for us?
Speaker 1 (32:07):
Mike?
Speaker 3 (32:07):
The US fertility rate remains at near record lows. More
than three point six million babies were born in the
US in twenty twenty four. I don't shout out to
me for one of them. I don't know my life really.
Speaker 2 (32:18):
But you know, when we talk about parentings in such
a flattering fashion, why we don't have more people out
there going for it.
Speaker 3 (32:26):
It's an issue that in terms of the fertility rate,
you know, all jokes aside in terms of wanting to
grow your population as the country going forward, it does
present a long term problem if you're talking about economic
growth going forward. You know, we're projecting out on demographics,
you know, generations that are yet to come. But there
(32:47):
is a lot of people out there that are forgoing
or delaying having children. And this pair is kind of
nicely with the story from the Boston Globe where the
average childcare cost in the state of Massachusetts has reached
almost twenty thousand dollars annually. And I'm sure a lot
of listeners will tell you out there that you can
find even more expensive options than that twenty thousand average
(33:08):
that's listed here. It's twice the national average for the
state of Massachusetts. And that is part of the problem.
Speaker 2 (33:14):
I mean, number one.
Speaker 3 (33:16):
Ultimately, the decision to have a child or not, you know,
that is completely up to the parents there, and that
is something that is more social than purely economic. I
think the economic reasons do get paired with the decision,
but it is not ultimately the end all be all,
but it certainly doesn't help the case that you have
(33:37):
nationally an issue of childcare costs that are really expensive,
you know, most prohibitially here in the New England area.
And the difficult part is there's not a real easy
way to solve that problem because the biggest expense is
staff and they're only making eighteen bucks an hour on
the childcare front, and that job, as we can all
attest having younger kids, it's not an easy one.
Speaker 2 (33:58):
There's just not a market based solution. Either you continue
the current path, or you subside through taxes like we
do K through twelve education, right, and that's that's just
going to be after you know, that'll be a decision
that we have to make. But to this point it's
been no, it's private until your kids go to kindergarten,
and that's certainly a contributing factor. However, I can't point
(34:21):
to any country that has successfully affected the birth rate
by imposing cheaper costs on parents, So that would be
the biggest way around.
Speaker 3 (34:32):
Yeah, that would be the biggest waste of money to try.
Speaker 2 (34:35):
And I don't know, but you know, certainly there's no
evidence out there.
Speaker 3 (34:39):
There's numerous case studies in trying this and it hasn't right.
Speaker 1 (34:42):
Really.
Speaker 2 (34:42):
I will also say that while I am, you know,
concerned about the United States birth rate, the Central Intelligence
Stages of CIA puts together these birth rates and it's
slightly different than the Wall Street Journal numbers. So maybe
this was estimates that I was working on. But the
United States, according to the CIA, you can go to
CIA doc of the World Factbook and look at this stuff.
(35:04):
Was one point eighty four was the fertility rate in
the United States, which isn't great. It puts US at
the one hundred and thirty third in terms of all
countries out there that they were able to measure, and
that's one thirty three out of two hundred and twenty
seven countries, So obviously not great. But go take a
look around the rest of the developed world. South Korea
(35:26):
second worst at one point one to two. That puts
South Korea in a position where quite honestly, thirty forty
years from now, I have no idea what that country
looks like, and that's a shrinking population. They were one
of the ones.
Speaker 3 (35:38):
That did try financial incentives to try and boost that rate.
Speaker 2 (35:41):
China most recent data, which I don't believe at all,
was one point five to five, and you know, quite honestly,
there could be a few million missing babies in that number.
Let's just call you know, call a spat a spade here.
I don't believe those numbers at all. Germany sitting at
one point five eight. There are a very few developed
countries in the world that are experiencing a higher birth
(36:03):
rate in the United States. France is one of them
that is demographically looking a little bit better than the
United States.
Speaker 3 (36:09):
Who's number one? Does it?
Speaker 2 (36:11):
It's all African countries. So the birth rates in Nize
are six point six four, Angola five point seven, d
r C five and a half. A couple of countries
that I'm not familiar with, Chad is sitting at five
and a quarter to Uganda over five. So the entire
African continent is seeing much higher birth rates and has
(36:32):
for quite some time, and massive population growth, which is
you know, obviously creating other problems there. But demographically, if
we're talking about you know, some of the Asian countries
China included in all of this, and large twasts of Europe,
they're entirely. Look, we are not the only country in
the world facing the problem facing the problem. There are
(36:54):
many countries that are. In fact, I would make the
argument that the United States looks in a far better
scenario because of two factors. One, our fertility rates actually
pretty good, and two, we are generally more comfortable with
the idea of immigration in this country than many other
countries are. Right, Like you talk about Japan and Korea
(37:16):
and China and just societally, the resistance to immigration in
order to fill jobs and grow the population there, it's
just not something that's even really considered. And so I'm
not saying that we will see massive immigration reform. I'm
just saying that I think the United States would be
more receptive to it than many other countries that are
facing similar problems. And so, yeah, I don't know what
(37:37):
those countries end up doing with their social programs that exist.
China doesn't have much of one. But you know, United
States is already facing huge issues with our social security
and Medicare funding plans. And that's when we have one
of the better fertility rates in the entire world when
it comes to developed nations.
Speaker 3 (37:55):
It peaked back in nineteen fifty seven, the US fertility
rate at three point seventy six berth per woman. We
sit at one point six y two or I guess,
Mike you had seen three UH.
Speaker 2 (38:06):
Markets remain strongly in positive territory, with the S and
P five hundred up about one and a half percent.
As we close out the show, We'll be back at
it tomorrow with alphabets, Google's parents companies earnings tomorrow on
the show. Have a great rest of your day, folks,
The Financial Exchange is produced by Money Matters Radio and
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(01:06):
and faw Lane.
Speaker 2 (01:11):
Good morning, Welcome back to the Financial Exchange. Our top
story the day continues to be the ongoing trade war
between the United States and China and the fallout on
corporate earnings and elsewhere from that possibility. But today equity
markets moving strongly to the upside. We've got the Dow
Jones Industrial average up two hundred sixty nine points or
(01:33):
two thirds of one percent, the S and P five
hundred up seventy two or one to third percent, in
the NASDA c up three hundred five points one point
eight percent this morning, yield on the ten year treasury
down slightly to four point three two seven, so some
calm there in the bond market for the time being.
And oil, which has obviously been dropping substantially, now sitting
(01:54):
at sixty two dollars and seventy cents a barrel. That
brings our national average for gas prices across the country
out down to three dollars and seventeen cents as of today.
Across the New England region, you're largely seeing that a
little bit lower, with Maine sitting at two ninety eight,
New Hampshire sitting at two eighty five, Massachusetts sitting at
(02:17):
two ninety six, Rhode Island at two ninety five, Connecticut
at three oh six, and Vermont at three oh nine. Uh.
The only other thing I want to check on is
where we are now sitting at for the thirty year
fixed rate mortgage. Yeah, sitting still just below that seven
percent mark on the general thirty year fixed and slightly
above that seven mark on the thirty year jumbo. Anything
(02:40):
else catching your eye in terms of market. Obviously we're
in the midst of that spring home buying season that
will really continue right through July fourth holiday and then
you know, see another uptick in the fall in all likelihood,
so you know that that thirty year mortgage story continues
to dominate, and we're starting to see inventory tick up
(03:01):
in large swaths of the country, just not here in
New England, but with mortgages up at seven percent, one
of two things is going to happen. Either people are
going to delist homes because they're not moving, or prices
are coming down.
Speaker 3 (03:15):
Yeah. We saw a report come out this morning where
the sales of previously owned homes in March fell five
point nine percent from February to an annualized rate of
four million on a seasonally adjusted basis, they were lower
two and a half percent lower than March of last year.
So kind of furthering your point, Mike. Increase in inventory,
it was up twenty percent from a year earlier, but
(03:37):
the amount of sales seemed to be slowing down, a
combination of the higher mortgage rates than the concern of
the broader economy.
Speaker 2 (03:45):
Back to the subject of Chinese tariffs, the Ministry of
Commerce spokesperson for China, he Ha Dong said, at present,
there are absolutely no negotiations on the economy and trade
between China and the United States. So again this is
going to be the dominant story here and thus far,
(04:07):
in spite of the commentary this week, every time the
President has announced tariffs on China, there has been no
hint of negotiation or hint of reconciliation. It has been
China responding in kind and with ford maybe not necessarily
in kind because they have different tools in their belts,
but responding very differently than, for instance, what you got
(04:30):
out of the European Union, Vietnam or other countries that
have largely come to negotiating table. We will kick off
Megacap earnings this afternoon after the bell with Alphabet reporting,
What are we expecting to hear from Apple s I
keep saying Apple, Apple, not Apple Alphabet.
Speaker 3 (04:51):
It is Google.
Speaker 2 (04:52):
Let's just call it Google. I'm done with this, Google's
parent company. What do we expected to hear and will
it really tell us any thing larger about the state
of the economy. I mean, very few companies get a
better idea of advertising revenue, I suppose, so that that'll
be compelling.
Speaker 3 (05:08):
Yeah, one could argue that they have a monopoly on
online advertising. In fact, many federal judges are making that argment.
Speaker 2 (05:17):
This week.
Speaker 3 (05:17):
They are battling the Justice Department over the potential breakup
of Alphabet, you know, decoupling. Perhaps it's Google Cam browser
or some of its advertising technology. Those are some of
the things that have been potentially rumored to have occurred
or something that the Justice Department would like, but that
still has to go through the court process. They also
(05:38):
have had two federal judges ruling that they have illegally
monopolized some online advertising technology markets. So that's kind of
the backdrop on what they're dealing with on the legal front.
Of course, as you mentioned, they're on the forefront of
the advertising for online If you have any sort of
recessionary impacts to a decline in e commerce an averageing spending,
(06:00):
they could be significantly impacted there. The numbers that they're
going to report obviously are on the prior quarter, so
they're anticipating a twelve percent revenue growth for the quarter.
Some pretty strong numbers. But ultimately the I for all
investors out there will be any type of commentary they
may have on the current economic backdrop. They find themselves
(06:20):
in a difficult place. When you're in the hore of
the Justice Department. Microsoft can sort of relate to this
back in the late nineties, where it is a period
of significant innovation and AI. It's extremely competitive as to
who is going to grab the biggest foothold there. And
I talked about this on the show the other day. Chat,
GPT and other models like that to me serve as
(06:41):
a big risk to Google's search business.
Speaker 2 (06:44):
Explain that a little bit better, because you know, I've
been watching the two of us right I'm ongoing right
now googling different things, looking up different items. You've got chat,
GPT open, and you know are also summarizing some things.
But that's some pretty serious headline risk for Google. Outside
of all of the anti trust concerns that have been
(07:06):
dominating Google story over the last few years. This this
AI risk spell it out word for word in terms
of how it poses a threat to Google.
Speaker 3 (07:15):
Yeah. So Google has about ninety percent of the search market.
If you look at the other competitors that it is
in the same arena with, they just absolutely pale in comparison.
They are dominant in that space. And how Google makes
its money is that Mike or myself if we're out
traveling on vacation, we're looking up, Hey, good restaurants in
(07:37):
the Charleston area or where I was, or whatever the
case may be. They are generating Google that is revenue
from advertisers for local restaurants to be at the top
of their search. There. If that were to deviate where now,
as you mentioned, I'm on shat Gibt searching things, there's
other competitors out there. Meta is going to have its
(07:58):
own one and Google, to be fair, it does have
its Gemini service. But there is the potential for fragmentation
the search market where my go to for looking things
up may not be Google going forward, And in particular,
when you have the backdrop of a lot of antitrust
pressure on Google. What happened to Microsoft, This was a
(08:19):
different technology trend is more specific to the PC market,
But they took their eye off the ball or just
were all consumed by the anti trust allegations, and as
a result, they missed a lot of technology trends over
the next decade, particularly in mobile and others. The same
thing could potentially happen to Google. It's just a risk
that loom.
Speaker 2 (08:37):
Yeah. I mean, if you're sitting there in I don't know
when did the BlackBerry come.
Speaker 3 (08:41):
Out early two thousands six, Yeah.
Speaker 2 (08:45):
If you're sitting there in nineteen, it's earlier than that.
If you're sitting there in nineteen ninety nine and saying, hey,
who's going to be the dominant player in the you know,
consumer hardware market for electronics, you're one of the biggest
bets out there, would have had to be Microsoft. I
remember that came out with a smartphone very early on
(09:06):
that completely failed across the board. You probably wouldn't have
put a whole bunch of money on Apple, and you
certainly wouldn't put any money on some tiny Canadian company
called BlackBerry. But yeah, with Google, that threat to their
search business, is it could be overstated because they are investing,
you know, billions upon billions into their own artificial intelligence
(09:29):
and are looking for ways to monetize it as well,
and they can afford to do so, so they do
have a leg up there. But I think about it.
Just think about it. Actually, how when you went to school,
I distinctly remember having classes with librarians on how to
properly use search when doing a research paper. When when
(09:50):
you know, when utilizing search, because you know, they were
going from he here is how you used to look
it up in an encyclopedia to here's how you accurately
use search and Google and get rid of bad results
and find the stuff that you actually need and cite
it properly, et cetera. That same exact process, I guarantee
you is occurring already or is being planned out in
(10:14):
public schools across the country. When it comes to the
use of artificial intelligence, it can do really compelling things,
stuff that I have no idea how to do as
somebody who's only one generation removed from it. But you know,
I'm sure you guys have heard of this too. But
there's another AI system out there. You can basically feed
a whole bunch of different sources that you want to
(10:34):
learn about, like, okay, you know these five articles. Obviously
you can do things where you summarize them, but there's
another AI service where you say, okay, you know, read
these seven different pieces and create a thirty minute podcast
for me. So I want to listen to it on
my way home, and I want to just get it
that way instead of having to read through something, and
it will create a personalized podcast based on the sources
(10:55):
that you used. That is not something that Google is
going to be prepared to deal with. They could because
if they can sell advertisements on those podcasts, then they
can crush it. But that is a real threat to
the entirety of Google's business that didn't exist before. And
we're not even getting into the fact that two judges
(11:15):
have now called them a monopoly and are looking for
some form of breakup when it comes to their business.
So it'll be interesting to hear from a number of
different perspectives about alphabets earnings. I don't think it's going
to tell us much about the state of the consumer
and their concerns about recession and trade war, but I
do think it tells you a lot about where they
see threats coming down the highway. Let's take a quick break.
(11:37):
When we come back, a little bit trivia for you
next year on the Financial Exchange, Tara.
Speaker 1 (11:42):
Spears continue to grip markets. Get the latest straight from
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Miss any of the show, Catch up at your convenience
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(12:02):
business and financial news in New England and around the country.
This is the Financial Exchange Radio Network.
Speaker 4 (12:16):
All right time for trivia here on the Financial Exchange.
And today is Kelly Clarkson's forty third birthday. Clarkson rose
to fame when she became the first winner of American Idol.
Clarkson has since gone on to sell over thirty million
albums and has won three Grammy Awards. So trivia question today,
(12:38):
what year did Kelly Clarkson win American Idol? Once again?
What year did Kelly Clarkson win American Idol? Be the
seventh person today to text us at six one, seven, three, six,
two thirteen eighty five with the correct answer and you
get a brand new Financial Exchange Showed T shirt and
once again the seventh correct response text us at six one, seven, three, six,
(13:02):
two thirteen eighty five will win that T shirt. See
complete contest rules at Financial Exchange Show dot com.
Speaker 3 (13:08):
What percent of our listeners could rattle off of Kelly
Clarkson song?
Speaker 2 (13:11):
All of them? I'll see. Uh. We did receive an
economic data point this morning that we have not yet discussed,
which was the weekly jobless claims. As a reminder, we
get a monthly Job's Report that surveys both businesses as
well as consumers. We also get a weekly read from
states who submit data to the federal government on pardon me,
(13:34):
how many people are signing up for unemployment. And it
is as close as you can get to a real
time indicator on the state of the labor market. And
so we've been keeping an eye on it because look,
CEOs have not been talking very optimistically about this year
and they have been pulling back on new hiring. But
the weekly jobless claims came in at two hundred and
twenty two thousand. That's up about six thousand from the
(13:56):
month prior and right in line with expectations. So the
firing story continues to be a non story to this point.
I think there's a few things you can point to here. One,
if you're a government worker who has been laid off
to this point, you are likely receiving severance, so you
cannot file for unemployment anyway. And you also don't show
(14:17):
up in these numbers in the first place because you
have a different unemployment system that you file through. And
if you're a government contractor, same story. To this point,
you haven't really seen those job cuts come yet because
the funding hasn't been fully cut off, and the Trump
administration is winning and losing some court cases when it
comes to all of that, and so, yeah, there have
been stories here and there of doze cuts and how
(14:39):
that might play out, but it certainly has not affected
the labor market to this point. And likewise, you know,
if you had asked me late last year when we
were talking about the things that Amazon and Google and
Microsoft we're all talking about, I would have told you, yeah,
it looks like layoffs might be around the corner, but
to this point they haven't really occurred. But I want
(14:59):
to cover some of those actions that Google and the
big tech companies have been taking pardon me, Google, for one,
is forcing some remote workers to come back three days
a week or lose their jobs. It's a pretty far
cry from where they were a few years ago during
the COVID pandemic, and offering those employees remote work, you know,
substantially falls right in line with what their competitors have
(15:23):
been doing, though, because you know, Amazon did this, I
think it was late last year, kind of blew up
in their face because they were hoping a bunch of
people quit and turned out they didn't have enough office
space for those people. So we'll see if Google falls
for the same problem here. But I'm seeing Microsoft too.
Microsoft is apparently kind of taking a page out of
Amazon's playbook here, which is, hey, you low performing employee
(15:49):
based on these metrics, We're going to put you on
a performance improvement plan, and if you don't improve, you
are fired. But as an added incentive, like here's ten
thousand bucks if you just want to walk away, and
I don't think that's actually gonna be successful for them
in this economy to get rid of some of those
low improves. The reason they do this is because you know,
if you take that money, you're far less to end
(16:10):
up in a lawsuit with the with the employer, and
so it's you know, on average, probably just cheaper for
Microsoft to go and look at something like that, and
the package is probably a heck of a lot more
than ten grand. But in any case, it's another company,
you know, Microsoft, Amazon, Google, some of the biggest tech
employers out there that seem to be speaking from the
same playbook here. I don't. I'm sure there are some
(16:34):
at Google who are really seeing the benefit of being
in office. But what I buy and large see here
is a company that wants to reduce headcount and wants
to do so in the least controversial way they can,
which is saying, hey, get back to the office.
Speaker 3 (16:51):
The path of least resistance, sort of not a layoff,
but sort of trying to usher people out the door
as nicely as possible. And that that was the Amazon
story too. You know, they can make the veiled argument
of oh, it's to increase productivity and you know, communication
between teammates that you come back into the office. But
ultimately we know what the real story is here, and
(17:12):
it's pointed out by them offering voluntary biots. You know,
if you're doing that and you're coupling that with bringing
someone into the office three days a week. That is
the intention behind these moves.
Speaker 2 (17:22):
I struggle with the employment picture because on one hand,
it is very much good news that the unemployment right
still sits at the low fours and you know, we
are still not seeing any sort of uptick and jobless
claims or really any indication of mass layoffs is just
not there. And I find that quite encouraging, because you know,
we're at such a healthy stand starting point from the
(17:43):
labor market. And look, I know, if you are listening
with a college student who's graduating in May at home,
you're probably experiencing something very different, and I acknowledge that,
but you know, compared to other times in history, this
starting point is pretty good. The downside to that is
cuts to the job market never come early in an
(18:06):
economic downturn. They're one of the last things that you
see in terms of that overall downturn. And I'm wondering,
if I can quickly pull it up here unemployment rate,
I want to look it up back in eight just
so we can there we go. So the unemployment rate
during the downturn in two thousand and eight, it started,
(18:31):
you know, May of seven was sitting at four point
four percent. You didn't hit that peak until October of
two thousand and nine. The stock market had already bought
them back in March of nine. You had already been
in a recession for a good year prior to that.
The unemployment rate, which by the way, topped out at
ten percent during that recession, did not hit that peak,
and you did not see those big layoffs really until
(18:53):
you know, midway through eight and laid into nine when
those things really started taking place. And so the unemployment
rate is very important. It is an indicator of a
lot of different things. It is not a leading indicator
of recession. Is the important thing to notice here. If anything,
it tells you you're already in a recession once you
start seeing it going up.
Speaker 3 (19:13):
I'm interested to see. I believe it's probably next Friday
that we get the month of April jobs for in
terms of what the numbers come out, because I just
can't imagine, like you were mentioning on the hiring front,
I could see the job ascames we've talked about that
data not be an issue, but I can't see too
many new jobs being added. But we'll see.
Speaker 2 (19:30):
Quick break trivia winner and then Stock Investors and the
Frazzled Market coming up next.
Speaker 1 (19:42):
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(20:03):
the Financial Exchange Radio Network.
Speaker 2 (20:16):
All right.
Speaker 4 (20:17):
Trivia question today was what year did Kelly Clarkson win
American Idol? Well, that would be back in two thousand
and two. Scott from Chelmsford, mass was our winner today,
taking home a brand new Financial Exchange Show T shirt
and we played trivia every day here on the Financial Exchange.
(20:40):
See complete contest rules at Financial Exchange Show dot com.
Speaker 2 (20:43):
Paul I oftentimes pooh pooh folks when they tell me
about volatility in the markets, because I've hired people describe
twenty twenty four as a volatile market and it just
plain old wasn't. But you know, there's a lot of
different things that affect people perceptions of volatility. One of
them is the Dow Jones Industrial average because it's just
(21:05):
always been a part of market reporting, and these days,
you know, today we're having a two hundred and fifty
point swing. That represents about two thirds of a percent,
and it's not that significant. However, this year you can
absolutely claim volatility is back in fashion. And you know,
we whether you want to measure with the VIS which
you know reached thirty four back in April, which is
(21:29):
you know, highest you saw since COVID levels, whether you
want to you know, talk about any other measure in
the bond market, et cetera. It is certainly the case
that volatility is back in markets right now. It is
higher in many ways than we've seen for several years.
And I think investors, especially newer investors, are having a
(21:52):
tough time kind of digesting that because honestly, even in
twenty twenty two when we saw some volatility there, it
was not it was very short lived. COVID was very
short lived in terms of volatility we saw there, right,
you had market breakers back in circuit breakers on the
markets back in twenty twenty that hit, And so yeah,
(22:16):
I kind of shake this moment off because it wasn't
as bad as that. But if it continues, I just
I'm seeing it play out with people I speak to
about their lack of confidence that they had gained over
the last few years when it came to invest investing
when markets are down, et cetera, et cetera. I think
all that's being challenged this year.
Speaker 3 (22:35):
It is it's been a year that's been just marred
by up and down days. It just is something that
really that you couldn't remember since twenty twenty, that is
the last period of time the SMP had gained or
lost at least one percent in seven of the last
ten sessions. In April is going to be the most
volatile calendar month. So it comes to a point when
(22:56):
you're dealing with clients that you just want to make
sure that their allocation is positioned appropriately during this period
of volatility, because that's what you lean on in these times,
and people who do not have an allocation that they're
comfortable with usually these periods of volatility leads to them
questioning the strategy or getting emotionally upset by the ongoings
(23:16):
of the market that we've seen over the last month.
Speaker 2 (23:18):
And what worries me the most when I think about
this overall situation is there's a lot of people that
I've talked to over the course of the last year
or so who may be messed out on some of
the big gains in twenty three and twenty four because
they just didn't think they were possible. They maybe thought
we were going into recession, or the taxes were going up,
or any number of things might have played out. They
are feeling like they are playing catch up perhaps, And
(23:41):
in many cases, the story I've heard is, you know,
I really thought, whether I agree with his policies or not,
I really thought that Donald Trump would be good for
the stock market. And I might have gotten more aggressive
because of that with my investment portfolio than I otherwise
would have. And now I'm kind of sitting here. I'm
not ruined. Most people haven't been ruined by this type
(24:02):
of volatility unless you're all sorts of levered up into
concentrated concentrated bets. But maybe just getting a little bit
concerned about, Okay, if this were to continue, if this
does result in a recession, if the tariffs are back
on play, as they seem to be changing week to week,
how am I positioned for something like that? And that's
(24:24):
that's the good question to ask. It's it's not a
great question to ask, like, Hey, when should I When
should I sell all this and go to cash, trying
to time that maybe somebody out there can do it,
But I've never met them, and I certainly know that
I can't try and figure out the timing of all
of this because the news story is changing every day.
The question to be asking yourself is if we do
(24:45):
get that worst case for stock markets. I'm not saying
about the employment situation or manufacturing, but like, let's talk
about the worst case for the stock market, which is
a drawn out, protracted recession with a deep draw down
in stocks. Will I be a to withstand that? And
I don't just mean that from your portfolio, but hey,
if I lose my job, what sort of situation would
(25:07):
I be? And if I was without an income for
six months, would I be able to make an emergency
repair to my home or on my car if something happened?
And then yes, of course, if I did see a
stock market downturn that lasted four or five years, which
I know is a foreign concept to some people listening
right now, but oh wait, that downturn lasted about five
(25:28):
and a half years. Dot Com bobble that during downturn
in stocks lasted a good six years. If you were
diversified and a lot longer if you weren't. If you
can't answer those questions of hey could I withstand that?
And how would I do it? Please give the folks
at Armstrong Advisory Group a call. We offer free consultations.
We'll sit down with you to address your specific issues
(25:52):
with your specific portfolio and your specific lifestyle, because it
is different for every single individual and simply filling out
a survey online is not going to answer all those
questions for you. Give us a ring at eight hundred
three nine three for zero zero one. That's the number
for the Armstrong Advisory Group. We've got a presence across
New England, but we sit down with our clients across
(26:12):
the country, across the world, So if you have questions
or you know somebody who does, the number again is
eight hundred three nine three four zero zero one.
Speaker 1 (26:22):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong make contact you to offer investment
advisory services.
Speaker 2 (26:37):
In the backdrop of everything going on with tariffs, there's
also been competing tax bills that have been making their
way through the House and Senate via the reconciliation process
because they do not have the votes to pass them
via a regular bill. The conjecture out there has been
throughout all of this, where are the cuts going to come?
(26:58):
And how are you going to pay for them? Because
there are limitations in terms of what they're able to do,
And frankly, the limitations that I'm most concerned about today
is how is the bond market going to treat some
sort of giant tax cut with big deficit spending if
that's what we get. I'm not convinced that that's where
we're going to end up. But if we get that,
(27:19):
will you see yields rise? Because international investors are just
a bit fed up with the US story, both in
terms of trade as well as deficits. The possible outcome
of what had been discussed is hey, in order to
fund some of these big tax cuts on social security,
on over time, on tips, would be bumping up the
(27:40):
tax rates for top income earners, for millionaires and other groups.
Steve Bannon had pushed for this quite a bit behind
closed doors. President Trump over the last few days seemed
to have tossed some cold water on that one, saying
that a potential millionaire's tax was quote very disruptive. That
(28:01):
was after House Speaker new former House Speaker New Gingrich
circulated message from Trump saying the President loves the idea
of a small tax increase on the Ridge, but was
counseling Republicans against it for a number of political reasons.
This is all reporting from the Wall Street Journal. So
this makes two things more likely to me. One, I
don't think that that top income bracket is moving much
(28:22):
at all, which is currently sitting at thirty seven percent.
So if you're earning I think it's as a married
couple over three quarters of million dollars, you're hitting that
thirty seven percent rate, probably not going anywhere during this bill.
It also makes it more difficult to pass some of
those priorities though that he campaigned on, such as the
tax on tips, social Security, and other items that would
be more main street focused. So I'll be very interesting
(28:46):
to see where this all comes out. They are not
finding much success in finding the cuts that they want
to do to offset all of this, and so in
the absence of tariff revenue offsetting it, in the absence
of massive government cuts to Medicare, Medicaid, so security and defense,
which are not coming either. I don't know how much
(29:07):
of a tax bill you're really going to be able
to put together here without that tax income on millionaires.
Speaker 3 (29:12):
Yeah, well, I'm surprised that this is something that the
Republican Party was potentially learning option. Yeah, it just seems
so counterintuitive.
Speaker 2 (29:21):
But frankly, look, I mean the political norms have changed,
of course, they have changed significantly. They've been changing over
the last eight years. But the Republican Party is not
the party of free trade anymore. They are not necessarily
the always pro business party as they were, you know,
prior to twenty sixteen, and that has been there's been
(29:44):
a general push away from free markets from both Democrats
and Republicans over the last few years. But this did
surprise me quite a bit. It's pretty unrecognizable from the
Republican mantra over the last fifty years, but was kind
of in line with stuff like tariffs and other policies
that have been coming out of the Republican Party this
time around.
Speaker 3 (30:05):
Not that I agree with the idea of increasing the
highest bracket, but Trump mentioning that the reason that he
shouldn't proceed they shouldn't proceed with it is it would
be very disruptive and a lot of millionaires would leave
the country. That I sort of scratched my head on
just because the whole idea of renouncing citizenship and you know,
moving out of the United States to me, just because
(30:26):
of an increase of thirty seven to thirty nine points
six percent, to me, feels rather unlikely.
Speaker 2 (30:32):
I would agree there. I would be much more concerned
about a bump up of the corporate tax rate and
company's abilities to relocate their headquarters. Go show me which
country that you actually would feel comfortable living in that's
going to tax you on your income if you're making
you know, three million dollars a year at less than
forty percent. Yeah, it's a pretty limited list, right, It's
(30:54):
a fairly limited list. And so I'm with you there.
I don't know to what degree it actually drives investment
out of the United States. Let's take a quick break
when we come back, bit of stack roulette. Here on
the financial exchange.
Speaker 1 (31:06):
Market, volatility is at its highest point since the pandemic.
Keep it here for the most comprehensive coverage of the
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Speaker 4 (31:32):
This segment of The Financial Exchange is brought to in
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Speaker 2 (32:03):
Time for bid of stack eru let here, Paul, What
do you have for us?
Speaker 1 (32:07):
Mike?
Speaker 3 (32:07):
The US fertility rate remains at near record lows. More
than three point six million babies were born in the
US in twenty twenty four. I don't shout out to
me for one of them. I don't know my life really.
Speaker 2 (32:18):
But you know, when we talk about parentings in such
a flattering fashion, why we don't have more people out
there going for it.
Speaker 3 (32:26):
It's an issue that in terms of the fertility rate,
you know, all jokes aside in terms of wanting to
grow your population as the country going forward, it does
present a long term problem if you're talking about economic
growth going forward. You know, we're projecting out on demographics,
you know, generations that are yet to come. But there
(32:47):
is a lot of people out there that are forgoing
or delaying having children. And this pair is kind of
nicely with the story from the Boston Globe where the
average childcare cost in the state of Massachusetts has reached
almost twenty thousand dollars annually. And I'm sure a lot
of listeners will tell you out there that you can
find even more expensive options than that twenty thousand average
(33:08):
that's listed here. It's twice the national average for the
state of Massachusetts. And that is part of the problem.
Speaker 2 (33:14):
I mean, number one.
Speaker 3 (33:16):
Ultimately, the decision to have a child or not, you know,
that is completely up to the parents there, and that
is something that is more social than purely economic. I
think the economic reasons do get paired with the decision,
but it is not ultimately the end all be all,
but it certainly doesn't help the case that you have
(33:37):
nationally an issue of childcare costs that are really expensive,
you know, most prohibitially here in the New England area.
And the difficult part is there's not a real easy
way to solve that problem because the biggest expense is
staff and they're only making eighteen bucks an hour on
the childcare front, and that job, as we can all
attest having younger kids, it's not an easy one.
Speaker 2 (33:58):
There's just not a market based solution. Either you continue
the current path, or you subside through taxes like we
do K through twelve education, right, and that's that's just
going to be after you know, that'll be a decision
that we have to make. But to this point it's
been no, it's private until your kids go to kindergarten,
and that's certainly a contributing factor. However, I can't point
(34:21):
to any country that has successfully affected the birth rate
by imposing cheaper costs on parents, So that would be
the biggest way around.
Speaker 3 (34:32):
Yeah, that would be the biggest waste of money to try.
Speaker 2 (34:35):
And I don't know, but you know, certainly there's no
evidence out there.
Speaker 3 (34:39):
There's numerous case studies in trying this and it hasn't right.
Speaker 1 (34:42):
Really.
Speaker 2 (34:42):
I will also say that while I am, you know,
concerned about the United States birth rate, the Central Intelligence
Stages of CIA puts together these birth rates and it's
slightly different than the Wall Street Journal numbers. So maybe
this was estimates that I was working on. But the
United States, according to the CIA, you can go to
CIA doc of the World Factbook and look at this stuff.
(35:04):
Was one point eighty four was the fertility rate in
the United States, which isn't great. It puts US at
the one hundred and thirty third in terms of all
countries out there that they were able to measure, and
that's one thirty three out of two hundred and twenty
seven countries, So obviously not great. But go take a
look around the rest of the developed world. South Korea
(35:26):
second worst at one point one to two. That puts
South Korea in a position where quite honestly, thirty forty
years from now, I have no idea what that country
looks like, and that's a shrinking population. They were one
of the ones.
Speaker 3 (35:38):
That did try financial incentives to try and boost that rate.
Speaker 2 (35:41):
China most recent data, which I don't believe at all,
was one point five to five, and you know, quite honestly,
there could be a few million missing babies in that number.
Let's just call you know, call a spat a spade here.
I don't believe those numbers at all. Germany sitting at
one point five eight. There are a very few developed
countries in the world that are experiencing a higher birth
(36:03):
rate in the United States. France is one of them
that is demographically looking a little bit better than the
United States.
Speaker 3 (36:09):
Who's number one? Does it?
Speaker 2 (36:11):
It's all African countries. So the birth rates in Nize
are six point six four, Angola five point seven, d
r C five and a half. A couple of countries
that I'm not familiar with, Chad is sitting at five
and a quarter to Uganda over five. So the entire
African continent is seeing much higher birth rates and has
(36:32):
for quite some time, and massive population growth, which is
you know, obviously creating other problems there. But demographically, if
we're talking about you know, some of the Asian countries
China included in all of this, and large twasts of Europe,
they're entirely. Look, we are not the only country in
the world facing the problem facing the problem. There are
(36:54):
many countries that are. In fact, I would make the
argument that the United States looks in a far better
scenario because of two factors. One, our fertility rates actually
pretty good, and two, we are generally more comfortable with
the idea of immigration in this country than many other
countries are. Right, Like you talk about Japan and Korea
(37:16):
and China and just societally, the resistance to immigration in
order to fill jobs and grow the population there, it's
just not something that's even really considered. And so I'm
not saying that we will see massive immigration reform. I'm
just saying that I think the United States would be
more receptive to it than many other countries that are
facing similar problems. And so, yeah, I don't know what
(37:37):
those countries end up doing with their social programs that exist.
China doesn't have much of one. But you know, United
States is already facing huge issues with our social security
and Medicare funding plans. And that's when we have one
of the better fertility rates in the entire world when
it comes to developed nations.
Speaker 3 (37:55):
It peaked back in nineteen fifty seven, the US fertility
rate at three point seventy six berth per woman. We
sit at one point six y two or I guess,
Mike you had seen three UH.
Speaker 2 (38:06):
Markets remain strongly in positive territory, with the S and
P five hundred up about one and a half percent.
As we close out the show, We'll be back at
it tomorrow with alphabets, Google's parents companies earnings tomorrow on
the show. Have a great rest of your day, folks,
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